The Pradhan Mantri Awas Yojana (PMAY) is a government scheme that was launched by the Government of India with the aim of providing housing for all by the year 2020. It was launched in the year 2015 and primarily caters to the housing needs of the Economically Weaker Sections (EWS), LIG (Low-Income Group), and MIG (Mid-Income Group).
This was launched because the demand for affordable housing has gone up considerably owing to high cost of living coupled with exponential rising costs of real estate means that owning a flat has now become a luxury which most of the population cannot afford.
For this initiative to become successful, there needs to be an active participation from all the parties which are involved. These include the private parties too. As a result, the Government has offered a number of tax benefits to those who are involved to make PMAY scheme affordable.
Tax Exemption for Private Players
This is one of the big steps which has been taken by the Government to encourage the participation of private players. All the private companies which take part in the construction of houses which are 30 sq. meters in size in metro cities and 60 sq. meter in non-metro cities will be given 100% exemption from taxes. The project, however, should fall in the affordable housing segment and should have been approved between the period of June 2016-March 2018.
The other criteria is that such constructions must get completed within a period of three years after getting approval for construction. These conditions have been put in place as it will lead to faster construction and availability of homes at a much faster rate for those who require a home very quickly.
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Some of the other benefits of this scheme include reduction of GST to an effective rate of 8% and 100% excise duty exemption for ready-mix concrete.
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.